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How to Avoid Leaving Money on the Table When Filing for Social Security How to Avoid Leaving Money on the Table When Filing for Social Security
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How to Avoid Leaving Money on the Table When Filing for Social Security

Insights & Ideas Team •  April 12, 2016 | Enjoying Retirement

Thinking about filing for Social Security retirement benefits? Before you take a trip to your local Social Security office to apply, make sure you fully understand your options and know exactly what you want.

“The worst thing you can do is walk into the agency’s office when you turn 62 and ask, ‘What should I do?’” said Elaine Floyd, a former financial professional who now trains other professionals on how to counsel clients about Social Security.

“The people who work in your local Social Security office are not trained to provide advice. In fact, they’re prohibited from offering advice about how and when you should claim your benefits,” said Floyd. “Their job is limited to gathering the necessary documents you need to apply for Social Security. So if you ask them for guidance, who knows what you’ll hear. You may end up leaving confused or—worse yet—leaving money on the table.”

The potential for confusion and misinformation has gotten worse over the past year, says Floyd, as Baby Boomers race to take advantage of two complex filing strategies to maximize their benefits (File and Suspend and Claim Now, Claim More Later) before those strategies expire.

“Social Security staffers are very nice, and they really do want to help. But they don’t understand all the intricacies of the rules,” she said. “I’ve seen some cases in which clients became so frustrated while at their Social Security office, they just gave up and went home. And as a result, they may be missing out on benefits they were entitled to.”

Another reason to avoid asking Social Security workers for advice, according to Floyd, is that they don’t have a view into your broader financial situation.

For example, one of the decisions you’ll need to make is when to begin receiving benefits. If you choose to take your benefit as soon as you are eligible (age 62), you’ll be locking in a reduced monthly benefit for life. But if you delay taking Social Security past your full retirement age, your benefit will increase by 8 percent each year (up to age 70) through what are called delayed retirement credits. So, is it more important for you to have some money now or more money later? That’s a question only you and your financial professional can answer, not Social Security staffers. “They’re focused on the near-term objective of getting you the highest benefit possible right now, but that may conflict with your long-term goal of receiving the most benefits over your lifetime,” said Floyd.

To make sure you’re receiving benefits in a way that works best for you, Floyd recommends taking these steps:

Social Security Simplified: The Right Options to Maximize Your Income1. Open an online account on the Social Security website. You can do this whether you’re two months, two years or 20 years from retirement. By signing up online, you’ll be able to check your earnings record each year, see your estimated retirement benefits (and how they change over time) and get answers to frequently asked questions. And for those nearing retirement, it’s a great place to start learning about what to expect and what to consider as you make plans to apply for benefits.

2. Get expert help. Just like you consult a tax expert rather than rely on the IRS for guidance, Floyd recommends finding someone who understands the ins and outs of Social Security to help you evaluate your options. “More and more financial professionals are choosing to develop expertise in this area so they can help their clients make smart Social Security choices that support their unique goals and expectations for retirement.”

3. When it comes time to file, file online. Floyd recommends filing for your Social Security benefits online rather than in person or by phone. ”The online application is very easy to fill out. It takes only about 15 minutes,” she said. While you might not find the exact strategy you’re looking for on the application, there is a remarks section for you to clearly specify what you want to do. “And after two or three weeks, you’ll get a call back from a more highly trained Social Security staffer who will go over your application and make sure everything is in place.”

The bottom line? Be realistic about what you can expect from workers on the front line of Social Security. Don’t ask them what to do. Tell them what you want—but that means you’ll have to take the initiative to educate yourself about your options, talk through potential scenarios with your financial professional and then decide on a strategy that gets you the benefits you deserve in a way that supports your overall financial plan and your unique goals for retirement.

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